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Commodity markets continue to offer investors value in February - Credit Suisse Asset Management

Thursday, March 10, 2011
Opalesque Industry Update - Commodity markets continued to increase in February despite mixed global macroeconomic conditions. Prices were supported by inflationary concerns and strong emerging markets demand amidst tight inventory levels for raw materials.

Nelson Louie, Global Head of Commodities at Credit Suisse Asset Management, said, “Uncertainty in the Middle East and North Africa remains high. The focus of the ever-changing situation shifted from Tunisia and Egypt to Libya. As a result, concerns that unrest would spread to oil-producing countries were materialized. As February came to a close, the situation in Libya remained uncertain and speculation continued as to how events there would unfold. This led to a sudden spike in oil prices late in the month, which weighed on equity markets, at least temporarily. It was not surprising to see a ‘flight to safety,’ with precious metals performing quite strongly.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “Fundamentals for many key commodities continue to improve due to a combination of strong demand and a variety of supply shocks, which have exacerbated already tight inventories and have helped to shrink limited excess capacity. Amidst this backdrop, we believe commodities are poised to serve investor portfolios well. We also believe investors will continue to benefit from the diversification benefits commodities provide.”

The Dow Jones-UBS Commodity Index Total Return rose 1.32% in February. Overall, 11 of the 19 index constituents increased in value. Despite negative performance in January, the Precious Metals sector was the strongest group in February, up 9.07% as a result of Silver’s stellar performance, gaining 19.97%. Precious metals increased as a result of renewed inflationary concerns. Similar to the previous month, Agriculture continued to do well, rising 0.95%, mostly as a result of Cotton’s gains in a tight inventory environment.

The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of their white paper, “How Commodities Can Help Investors Face the Uncertainty of the Inflation/Deflation Debate”, please email ir.betastrategies@credit-suisse.com.

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